Defense Ministry closes probe into Allot's alleged Iran sales

The investigation concluded that the company was unaware that the internet monitoring equipment it sold to a distributor ended up in Iranian hands.

The Ministry of Defense has closed its investigation against Allot Communications Ltd. (Nasdaq:ALLT; TASE: ALLT) for alleged sales of its internet monitoring software to Iran. The investigation concluded that the company was unaware that the equipment it sold to a distributor ended up in Iranian hands.

"Bloomberg" broke the story in late December, claiming that Allot knowingly sold the equipment to Iran. According to "Bloomberg", the company's "deep-packet inspection" technology can monitor e-mails and messages, and locate people through mobile phones. Allot's share price fell over 5% on Nasdaq and the TASE following the report, notwithstanding the company's denial.

"Bloomberg" claimed that Allot sold the equipment to a Danish company, RanTek, which repackaged it and sold to an agent named Hussein, who sent it on to Iran. Danish trade authorities discovered the transaction. Allot said in response, "Allot’s corporate policy is to comply fully with Israeli and non-Israeli laws, including all applicable export laws and regulations. The company’s products are not defense items and are designed and intended for the civil market."

Allot's monitoring solution can locate and identify online activity, but not its content. In other words, it is possible to if someone is trying to access YouTube, but not what he or she is doing there. The product does not require security clearance for sale, as it is not classified as an espionage or surveillance product.

Allot's share price rose 1.6% in morning trading on the TASE today to NIS 59.52, after edging down 0.04% on Nasdaq yesterday to $15.60, giving a market of $467 million.

Published by Globes [online], Israel business news - www.globes-online.com - on January 25, 2012

© Copyright of Globes Publisher Itonut (1983) Ltd. 2012

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